Analysis

Brexit Update: Through the Looking Glass

Matthew Elliott

After a tumultuous week in the process of determining the UK’s future relationship with the EU, our public affairs team has put together this overview of what the recent key developments have been and looks ahead to what might happen next as the 31 December end date for the transition period draws closer.

“When I use a word,” Humpty Dumpty says in Through the Looking Glass, “it means just what I choose it to mean – neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master – that’s all.”

This exchange popped into my mind when I was reading the furore about Brandon Lewis’s statement, that the Government’s Internal Market Bill “does break international law in a very specific and limited way.”

The truth is that countries break international law all the time. And with international law being so amorphous, governments can usually make a case that their actions do indeed comply with it. But it is highly unusual for a government to admit to breaking international law, particularly a treaty which they themselves negotiated, signed, and won an election on the back of.

Domestic legislation usually complies with international law – it cannot mean just what a country chooses them to mean, to carry on the Alice in Wonderland analogy – because otherwise it cheapens international agreements and casts doubt on the trustworthiness of a government, and country.

So what does this all mean for the final stages of the EU-UK trade negotiations? Yesterday, Michael Gove held emergency talks with the European Commission’s Maroš Šefčovič – a formal ‘extraordinary’ meeting of the EU-U.K. Joint Committee – and David Frost and Michel Barnier met to conclude the latest round of negotiations on the future UK-EU relationship.

Šefčovič told Gove that if the Internal Market Bill were to be adopted, “it would constitute an extremely serious violation of the Withdrawal Agreement and of international law.” And he demanded the UK ditches the Bill “by the end of the month,” or risk jeopardising trade talks. Gove responded by making it “perfectly clear” the Government will not withdraw the Bill.

Furthermore, a legal analysis circulated among the EU member states suggests that the Bill could “open the way” for the EU to take legal action against the UK. I personally can’t see the EU being stupid enough to follow through on that – I think they’re self-aware enough to realise that it would backfire on them spectacularly.

The bigger danger for the UK is that the EU just quietly disengages from the negotiations, not trusting the UK, not seeing Brexit as a huge priority when they are fighting on multiple other fronts, and feeling that the Bill gives them the perfect excuse to blame the collapse of the talks on the UK whilst retaining the moral high ground internationally.

My hunch though, on balance, is that this is simply negotiation theatrics. I still expect a deal, and a smooth ending to the transition period on 31 December. But put it like this: I see a no trade deal Brexit as being as likely as a Trump victory on 3 November. And that is still a real possibility.

Matthew Elliott was CEO of the Vote Leave campaign and is a Senior Adviser to MHP.

Internal Market Bill

  • On 9 September, the Government published the Internal Market Bill, designed to support the continued functioning of the UK single market after the end of the transition period. The Bill includes provisions which would override aspects of the Northern Ireland Protocol (part of the Withdrawal Agreement ratified as recently as January this year)
  • Specifically, the Bill would allow the Government to determine how the state aid provisions in the Protocol are applied and disapply the need for exit declarations for goods travelling to Great Britain from Northern Ireland. Speaking in the Commons on 8 September, Northern Ireland Secretary Brandon Lewis admitted that the Bill breaks international law in “a very specific and limited way”
  • The Government also reportedly plans to use this autumn’s Finance Bill to override elements of the Protocol relating to the payment of tariffs on goods entering Northern Ireland from Great Britain which are deemed at risk of entering the EU. However, the Government’s proposals have been seen to undermine the chances of a UK-EU trade agreement being reached before the end of the transition period due to undermining trust on the EU side that the UK would comply with any provisions outlined in an agreement
  • An emergency meeting of the UK-EU Joint Committee, established under the Withdrawal Agreement to agree on the implementation of the Northern Ireland Protocol, took place in London on 10 September. At the meeting, the EU called on the UK to withdraw the relevant measures from the Bill by the end of September, adding that the Bill had “seriously damaged trust between the UK and EU.” A Commission statement issued after the meeting said: “Violating the terms of the Withdrawal Agreement would break international law, undermine trust and put at risk the ongoing future relationship negotiations” and raised the prospect of the EU taking legal action against the UK. In turn, Michael Gove said that the UK “would not and could not” withdraw the Internal Market Bill. The Times reports today that, should the UK maintain its position, the EU could impose sanctions on UK trade, including banning imports of British food and livestock
  • The Government published on 10 September its timetable for the Internal Market Bill to be debated in Parliament. The Bill is due to have its second reading and begin debate at committee stage next week. Committee stage in the Commons will continue during w/c 21 September. Whilst as many as 30 Conservative MPs – according to reports today – could support an amendment to the Bill’s provisions relating to the Northern Ireland Protocol, a characteristic ‘U-turn’ is not yet mooted and the Government expects its majority to see the Bill safely through the Commons
  • The Bill’s passage through the Lords, however, looks much more uncertain, with even prominent pro-Brexit Conservative Peers such as former Party Leader Lord Howard and former Chancellor Lord Lamont criticising the Government’s approach
  • The Government published yesterday a legal opinion on the Bill which stated that Parliamentary sovereignty means that Parliament “can pass legislation which is in breach of the UK’s Treaty obligations”
  • The Government’s proposals have also been met with opposition from the United States, with Speaker of the US House of Representatives Nancy Pelosi saying that there was “no chance” that a UK-US trade deal could be agreed if the UK undermined the Belfast (Good Friday) Agreement

UK-EU talks on their future relationship

  • The eighth round of UK-EU talks also took place this week, though in light of longstanding differences between the two sides on issues such as state aid and fisheries, as well as the Government’s proposals in the Internal Market Bill, no significant progress was made by David Frost and Michel Barnier
  • Following the conclusion of this round of talks on 10 September, the EU’s chief negotiator Michel Barnier said in a statement that “significant differences remain in areas of essential interest for the EU”, particularly around the ‘level playing field’. In his own statement, the UK’s lead negotiator Lord Frost said that the differences between the two sides on some issues remained “significant,” though he added that further talks would take place next week, as planned, with a view to meeting the Prime Minister’s target of an agreement being reached by mid-October
  • The talks have not been derailed by the dispute over the Internal Market Bill

UK state aid regime

On 9 September, the Government also published more details of its proposals for the UK’s state aid regime after the transition period. Though further clarity from the UK on this issue is seen as crucial in progressing talks on the ‘level playing field’, the UK only confirmed that it would follow WTO subsidy rules from 1 January and that the final rules would only be established following a consultation due to conclude next year. In his statement issued following the eighth round of talks, Michel Barnier said that the Government’s announcement on state aid “falls significantly short of the commitments made in the Political Declaration (on the future UK-EU relationship)”

Forthcoming events

w/c 14 September 

Next round of UK-EU talks takes place in Brussels

24-25 September

Special European Council meeting to take place to discuss the situation in the East Mediterranean. Michel Barnier may also brief EU leaders on the status of talks with the UK at this point

Early October

It is rumoured that another ‘high level’ meeting between Boris Johnson and EU Commission President Ursula von der Leyen could take place at this point

15 October

Deadline set by Boris Johnson for agreement on a deal

15-16 October

European Council meeting takes place

End of October to Mid-November

Practical deadline for an agreement to be reached, in order to allow sufficient time for it to be translated and ratified by 31 December

10-11 December

European Council meeting takes place

31 December

End of transition period